Reynolds false profits; seeking financial and spiritual deliverance in multi level marketing and pyramid schemes (1997)

False profits : seeking financial and spiritual deliverance in multi-level marketing andpyramid schemes / Robert L.. What is there about us that enables MLM to gain such power over so ma

MLM - The New American Dream?

The Religion of Abundance

The MLM Catechism

Section II

The Setup

The Outlaw Network

The Night – and Might – of Enrollment

Airplane Illustration

The Ignorant, the Accused and the Arrested

Airplane Game Explained Illustration

The Case For Responsibility

Déja Vu

Section III

The Fountain of Youth Revisited

Family, Friendships and the Professions in the MLM WorldYes, But This One’s Legal!

Where Have We Been, Where Are We Going?

Searching for Meaning, Again

Beyond Self Improvement: Caring for the Soul

Beyond Prosperity: Spirituality and Community

Authors

False Profits Quote

“…False Profits invites you to determine, examine or reaffirm your highest ideals for a life that is worth living as it points out the profound distinctions between an existence founded upon material success and one that is dedicated to communal and spiritual vision.”

FitzPatrick Management Inc.

Charlotte, NC

Copyright © 1997, by FitzPatrick Management Inc in Charlotte, NC All rights reserved No partmay be reproduced in any form or by any means including electronic storage and retrieval ortranslation into a foreign language without prior agreement and written consent from FitzPatrickManagement Inc as governed by United States and International Copyright Law

FitzPatrick Management Inc

False profits : seeking financial and spiritual deliverance in multi-level marketing andpyramid schemes / Robert L Fitzpatrick, Joyce K Reynolds – [Rev ed.]

p cm

Includes bibliographical references

Pre-assigned LCCN: 96-095149

ISBN 0-9648795-1-4 (print book)

1 Multi-level marketing 2 Fraud–Florida–Case studies 3 New Age movement

I Reynolds, Joyce K II Title

HF5415.126.F58 1997 658.8’4

QBI95-20681

Robert L Fitzpatrick

I thank my wife, Terry Thirion, for her conviction that the message of this book is valuable andneeded I thank my monthly dinner and support group friends for their interest and encouragement afterreading the first chapters I thank theater producer and writer, Burton Wolfe, for his gentle but firmurging to keep my word about publishing this book I give special gratitude to counselor and author,Matthew Anderson, who told me not to let rejections discourage me from getting published Friends

Ed Greville and Steve Lanosa I thank for powerfully validating the book and inspiring me to put asidesecond thoughts Personal friend and graphic designer, Shep Root, I thank for reminding me of myabilities for promoting and defending my heretical ideas

I am especially grateful to those who came to my home for an emotional and confrontationalcritique of this book

Joyce K Reynolds

It never occurred to me that I would so enjoy being unable to tell where another’s thoughts orwords left off and mine began until I worked with Bob on this book I am immensely grateful to haveexperienced this kind of respectful, creative collaboration

Appreciation must also go to my dear sister, Judy, and her husband, John Morgan, for their present love, support and gentle care of my soul And, to their children, David, Richard and Alison,who not only add immeasurably to my life but who have done the honor of holding me in high esteemdespite my often changing fortunes

ever-A million thanks must then be sent to my countless New York City pals for their ever continuingsupport with special gratitude to Nuala Byrne, B.J Kaplan, Charles Mohacey and Cathy Wallach fortheir endless generosity and unconditional love

he created the original engraving.

Issuing in Latin from a human skull are words forebodingly imploring the reader to "Think your highest thought." Meanwhile an angel, overlooking a nobleman’s prosperous estate, orders the

deceased to "Now arise and approach the gate for your judgment."

The engraving, created in a time of great spiritual upheaval, addresses the age-old dichotomy ofspirituality which is soulful and timeless and financial prosperity which is temporal and material Theartist sees the two worlds of spiritual salvation and material prosperity as separate and mutuallyexclusive domains Today, prevailing beliefs treat financial prosperity as salvation itself or, at least,God’s sign of spiritual deliverance

This engraving is one of thousands of ancient renderings by unknown monks around the worldthat are being assembled and archived in a small monastery in Belgium With diligence, patience andvery little money, volunteers are preserving such works whose timeless messages are written in inkwhich is fading and on paper which is crumbling

A portion of the revenue from this book is being contributed to support the preservation effort

In an Earlier Era…

When False Profits was written and published as a trade paperback book in 1997, multi-levelmarketing (MLM) was already an ominously growing, predatory force on Main Street Thousands ofpeople were signing up and investing hundreds or even thousands of dollars in the belief that multi-level marketing was a truly new business model, a viable, sustainable and preferable alternative totraditional jobs, professions and businesses

At that time, high tech stocks were booming, (only for those who invested early; a later disasterfor others), housing values were growing and enormous new homes were appearing in every city (thehousing market later exploded in a disastrous collapse), digital "dot.com" companies wereblossoming (most proved to be stock scams) and new millionaires abounded

Magic was in the air Multi-level marketing promoters caught the spirit of these times Theypromised "unlimited" income to the little guy, just like those entrepreneurs on Wall Street seemed to

be gaining

The MLM income plans appeared indecipherable with their many commissions and bonuses tied

to volume purchase quotas and multiple levels on the pyramid chain But, success, the promotersproclaimed, did not come from studying the pay plan or from doing "due diligence" as conventionalbusinesses required MLM promoters and gurus claimed to know – and be able to teach – the true

"secrets to success" These "spiritual" laws, they said, included developing the habit of positivethinking and visualizing extraordinary the material riches that accompany success The MLM "salesmodel", they said, fused metaphysical secrets with an entirely new business model that everyonecould benefit from The key was to believe You also had to pay

Though MLM had been growing in the 1980s, it became wildly popular in some circles in the1990s, especially among those who had strong faith in ever-rising prosperity for themselves and theirchildren, even though their personal financial circumstances did not reflect it In fact, for millions ofhopeful people the American Dream was eluding them They were oppressed by credit card, schooland housing debts They were terrorized by corporate down-sizing and out-sourcing, and theydreaded the prospect of skill-set obsolescence in the new digital age Many had become frightenedand anxious for their futures even though they were well educated and had grown up with all theprivileges of the middle class The expected goal of economic security was drifting away What was

to become of their dreams and hopes? Their fear of financial bondage or possible ruin conflicted with

an abiding faith in continued prosperity and success

The mixture of fear and faith made them ideal candidates for MLM’s inspiring promise offinancial salvation and deliverance In MLM, hope was restored and fear was banished, if onlymomentarily MLM promised a supportive community of positive people and the reward ofextraordinary income to those who paid the money and committed the time to the MLM system This

"system" included continued payments, product purchases and relentless recruiting of others (friendsand family) to also pay, purchase and recruit It meant attending late night meetings, expensive, out-of-

town conferences, buying books, tapes and CDs written and published by MLM leaders, andavoidance of those who questioned or criticized the MLM plan Thousands flocked to the MLMrallies or eagerly accepted MLM’s promises from the trusted friends or relatives who enrolled them.

Yet, MLM was still a relatively insignificant factor in American life at that time The number ofcompanies was growing but still small, and many people were instinctively skeptical of MLM’sincredible promise of "unlimited income." Based on its famous flip-chart presentations with pyramid-shaped graphics, many suspected it was a pyramid scheme of some sort, despite the company’sclaims to be "direct selling." Many people took noted of the presentation’s emphasis on recruitingover retail selling MLM’s flagship company, Amway, was viewed by many as a clownish flim-flamfrom the 70’s and 80’s, that appealed mostly to the less educated and those in blue collar sectors.Even more important, most people were aware back then that pyramid schemes, whether or not theypersonally understood exactly how they work, are dangerous frauds and should be prosecuted by thepolice They were, therefore, wary of anything that even resembled such a scam

At the time of False Profits’ initial publishing, MLM was barely mentioned in the news media

No other book was in print that critically examined it Indeed, the lack of information was a powerfulmotivator for me to write the book I could see it was a relatively new phenomenon that was affectingmillions, yet remained critically unexamined

Despite the public’s lack of information, the US Federal Trade Commission (FTC) and theSecurities and Exchange Commission (SEC) did appear vigilant and informed about "endless chain"frauds at that time Based on periodic prosecutions of multi-level marketing schemes, both agenciesappeared politically willing and capable of preventing these Main Street frauds from gaining a majorfoothold In my view at that time, the FTC and SEC, with support of some very capable state AttorneyGeneral offices, would close in on MLMs False Profits would speed up the process

I saw the publication of False Profits as a much-needed resource for consumers, legislators,attorneys, and regulators who were already clued into or at least suspicious of MLM’s fakery Thebook, in my thinking, would provide a valuable tool for confirming and documenting what manypeople already knew or at least suspected, that multi-level marketing was a blight on the legitimatemarketplace, a kind of financial pollution

Because I was convinced, at that time, that MLM was a brief aberration, a fly in the ointment ofthe real economy, the narrative of False Profits does not dwell on the legalistic and economic factorsinvolved in exposing pyramid frauds The book does delve incisively into why MLMs are not "directselling" and how they are tied to the naked pyramid schemes, now called "gifting clubs." It explainsthe math trickery behind all "endless chain" income plans that doom 90-99% to always lose out Italso examines the phony health claims of MLM products and why so many MLMs make unregulated

"pills, potions and lotions" their products of choice

But the message of False Profits goes much deeper It asks the reader to look introspectively atthe much larger and more far reaching question of what makes so many of us vulnerable to MLM’sfalse promises and claims The issue of greatest importance, in my view at the time, was not thatMLMs constitute a free market fraud and a popular delusion that fleece millions of hard working andhonest people out their savings, but rather that we fall for MLMs in such huge numbers What isMLM’s strange appeal to us? Why do so many ignore the facts or the harsh experience of others and

plunge into MLM? What is there about us that enables MLM to gain such power over so many of us,leading millions to waste time and money, exploit friends and family and to divert us from our ownpersonal dreams, talents and ambitions?

From my own personal experience in MLM’s "cousin," the pyramid "gifting clubs", False Profitsrecounts the euphoria, blind faith, and ravenous ambition that pyramid schemes unleash in ordinarypeople I had seen how core values and personal relationships could be discarded in pursuit of thefinancial prize that pyramids promise And, I had seen that in the midst of folly, manipulation,deception and greed, pyramid scheme followers can fervently believe that their actions arejustifiable, ethical and for the good of others

I had personally experienced and I describe in the pages of False Profits the altered state of mindthat takes hold among pyramid participants in which rational evaluations and critical thinking areviewed as not only unnecessary but a sign of weakness and subversive negativity In short, I hadpersonally experienced the pyramid scheme’s power to create a cult-like following and its capacity

to defraud 99% of the investor/believers while leaving the victims confused or mired in self-blame.False Profits’ inquiry leads, uncomfortably, into an examination of our core values regardingwork and success and relationships It asks what the American Dream really means to us, the personalfreedom to pursue happiness on our own terms? Or merely the goal of making money? It asks evenmore profoundly, how we measure our own worth, by our values and relationships, or our bankaccounts?

And Now…

What a difference the past decade has made! In the realm of pyramid and Ponzi schemes, thechange has been breath-taking and tragic for America and many other countries On Wall Street andMain Street, we witnessed an epidemic of pyramid and Ponzi schemes Multi-level marketing was aharbinger of this downward economic and social spiral In this new era, the message of False Profitsbecomes even more relevant, while the environment is vastly more complicated for readers

Stories of Wall Street pyramids and Ponzis are reported almost every week now Theyrange from sophisticated, billion-dollar Ponzi schemes, to pitiful tales of retirees in smalltowns losing their life savings to wily friends or church members who claimed secretiveknowledge of investment opportunities, and to soccer Moms in suburbia obliviouslysoliciting $1,500 to $5,000 from their friends and relatives in "gifting club" pyramidschemes in which at least 90% will lose every penny they invest

The largest Ponzi fraud in Wall Street history was perpetrated not by an underworld sleazeartist – the type that most people had naively associated with such frauds – but by one of themost reputable and revered public figures in American securities

The banking industry, the mainstay of finance, is today commonly described as predatory,corrupt and unsustainable

Our largest financial institutions, investment firms and insurance companies, bankruptedthemselves and had to be rescued by taxpayers in a bailout that nearly pulled down the USTreasury Pushing falsely portrayed mortgages and investment securities in a scheme to kite

up real estate values, these trusted financial leaders created a devastating financial bubble

When their pyramid of mortgage loans and toxic stocks and bonds – which they had sold tothe public and to other countries – collapsed, it ripped a hole in the foundation of middleclass security – jobs, home values, pensions and life-savings.

Back down on Main Street today, what family does not have a member who is or has beenenrolled in a multi-level marketing, a.k.a network marketing or "direct selling" scheme thatpromises unlimited income and a remedy to the Recession? The number of such schemeshas multiplied many times over from when False Profits first came to print

Today, millions, not just thousands, attend MLM rallies where the highest ideals ofpatriotism, religious faith and family values are called forth from the podium to supportendless-chain recruitment scams

Though millions more participate today, the lethal financial results of MLMs remain thesame as when False Profits was first published 99% of all consumers who invest in theschemes as "salespeople" never earn a profit Many are financially ruined Yet, MLM hasboomed and gained mightily in stature In the face of facts, data, and the experience ofmillions who lose money in MLM, it is routinely treated in the media and by government as

a viable business that fulfills its extraordinary promise of financial security for all who joinand promote it For many, belief in MLM is akin to religious faith

For those consumers who still instinctively suspect that MLMs are disguised pyramidschemes, frauds or at least money traps, finding reliable analysis is more difficult now thanever before This is despite the emergence of "anti-MLM" websites and a few books thatexpose the scams Today, the term, pyramid scheme, is parsed and misinterpreted in aconcerted campaign to divert and confuse consumers MLM promoters swarm the internetwith diversionary websites, some of which claim to debunk MLMs but turn out to bepromotional Actual critics, meanwhile, are viciously attacked and vilified Some are suedfor libel for daring to point out MLM’s track record of 99% loss rates, documenteddeception and unsustainable expansion model.(I and all my colleagues who have writtenbooks or produced websites that critically examine MLMs have been sued.) Data on lossrates are covered up or withheld No MLMs reveal to their recruits how much of theirproducts are actually sold to retail customers, thus concealing the scheme’s total reliance

on constant new investment MLM attorneys and promoters pour forth a torrent of confusingand erroneous information, analogies and narratives They claim that the endless chain payplan is legal and legitimate – regardless of its pay plan, recruitment requirements or lossrates – as long as products are purchased by the participants or if the commissions are notpaid from entry fees, or if the scheme has a return-product policy

As another diversionary tactic to throw suspicious consumers off the trail, some MLMpromoters claim that many other MLM companies are indeed frauds, but not theirs Theconcept of a generally good industry with a few (unnamed) bad players is officiallyadvanced by the MLM industry’s trade association (some of its members were prosecutedand shut down, and others sued for fraud) Many consumers, consequently, lose even moremoney investing in one MLM scheme after another in a futile search for the "good" MLM

In sum, the snake oil propagated by MLM about a safe haven where the millions canprosper during a Recession and a financial system based on "exponential expansion" ratherthan supply-and-demand has exploded in force and reach

How It Happened…

Another entire book could be written to document how this amazing sweep of fraud across theland occurred and to describe all the various ways in which MLMs now affect America The causesrange from foreign policies that help MLMs enter other countries, to secret, million-dollarcontributions to presidential candidates, to promotions of MLMs by celebrities like Donald Trumpand the bizarre, though brief, fruit juice crazes MLM spawned The bottom line is that MLM’s powerand influence in America and over popular thought is indisputable

Two aspects of MLM’s rise to power, however, can be historically traced The first is the wave

of corruption that swept over Congress and America’s regulatory agencies in the 2000s and whichfacilitated financial frauds on a scale never before seen This corruption that brought about thebanking and mortgage catastrophe on Wall Street similarly supported and protected MLM fraud onMain Street In 2000 at the start of a new Millennium and a new presidential administration inWashington, an attorney for the largest MLM was appointed the chief of the federal agency chargedwith investigating and prosecuting MLM fraud MLMs had poured millions into campaign coffers toget this insider appointment As a result, the vigilance, competence and political will that were inevidence at the FTC when False Profits was first published were purged or suppressed The effect ofthis corruption was both administrative and psychological In the minds of many citizens the ensuinglack of government prosecution of MLM was interpreted as official approval Endless-chain fraudbecame, de facto, legalized In 2001, MLM walked into Washington and took a seat at the tables ofpower Now, it safely flourishes in the cheap disguise of a "direct selling industry."

The other historical factor that facilitated the spread of MLM followed the first Corruptionprotected fraud Fraud produced economic crisis, which produced massive unemployment andeconomic fear and insecurity

In the 1990’s MLM had risen on a wave of Wall Street bubbles MLM promoters tempted andseduced the struggling and anxious middle class with promises that they too could join in thisapparent prosperity They said millions of people could secure their fortunes by mimicking WallStreet titans through MLM’s system of "leverage" and "duplication." After Wall Street collapsed,jobs disappeared, and home equities were wiped out, the same promoters promised desperateimmigrants, devastated lower income groups, the ravaged middle class, and foundering upper middleclass people that MLM, and only MLM, could financially rescue them Promoters now claimed thatMLM was "recession-proof" and the only "safe haven" from unemployment and lost savings MLM’sversion of "self-employment" and "home-based" business was the consumers’ last chance, thepromoters claimed, not just to save their homes and families but to redeem their self-worth

MLM even found its first iconic spokesman, Donald Trump In the mid-2000s, the flamboyantbraggart and speculator became the most visible and famous promoter of the MLM system, evenfounding his own company that sold – what else? – a health concoction For millions of people, MLMbecame the last bastion of hope, the only voice that upheld the belief that the American Dream wasstill available for them Donald Trump told them it was true

In this brave new world of MLM, the "endless chain" is called a business model; salespeople donot sell products to customers, but only recruit other salespeople; the lost investments of 99% of the

"salespeople" are transferred to the 1% who recruited them"; and outrageously false income promisesare called "incentives."

The expectations that surrounded the print version of False Profits are but a distant memory now.Conditions on the ground have radically changed Yet, the mission of this book and its centralquestions are more valid than ever.

The key to consumer protection in this fraud-is-business environment is consumer awareness.This awareness begins with self-awareness, with an honest examination of values and goals regardinginvestment, work and purchase decisions Pyramid scheme power described in these pages, includingthe power to influence government, smother the truth and dominate and control the minds of believers,

is in full tilt in America now MLMs succeed best among those who are confused, fearful orfinancially desperate The promises of "unlimited income… breakthrough opportunity… being at theright place at the right time… and anyone can do it" have become irresistible to many more people,but only because they see no other direction to take and have no means to examine what is beingdeceptively proposed

As evidenced by the housing catastrophe, the Madoff scandal and the immunity from prosecutionnow granted to Main Street and Wall Street fraudsters, it is obvious that citizens cannot expectpolitical representation or legal protection Investigative media coverage of such scams is also lesslikely today as large media conglomerates are focused upon corporate sponsorships and entertainmentcontent

What can people rely upon to guard against Main Street pyramid frauds? Primarily, themselves.Education, understanding and awareness are more crucial than ever

As was expressed in 1997 when False Profits broke new ground with its revelations and inquiry,this new digital version of the book is offered in the hope that it will open minds as well as eyes Itsaspiration is to enable readers not just to avoid the pitfalls of frauds, but to create lives worthy oftheir talents, skills and highest values

Related Resources Now Available that Were Developed since False Profits was OriginallyPublished…

Pyramid Scheme Alert – founded in 2000, the website of this consumer awareness and advocacygroup offers the greatest resource on news and tools for avoiding and combating the plague ofpyramid schemes

What About This One? – a text and audio resource in a questions-and-answer format offers thetools for examining any multi-level marketing scheme

The Main Street Bubble – Why did the FTC and the SEC effectively stopped investigating andprosecuting Main Street pyramid schemes in recent years? This research document provides thedisturbing answers: political contributions, insider influence, conflicts of interest, and old-fashion corruption The same factors that led to the housing bubble and financial collapse are atwork in protecting MLM scams

Other Investigative Booklets: Several groundbreaking booklets are available to purchase thataddress the larger questions of how MLM has spread in America; how Amway, which wasprosecuted by the US government in 1975, today, operates with impunity; and what data exist toshow exactly how many people win or lose in MLM schemes

The 10 Big Lies of Multi-Level Marketing: Succinct and hard-hitting, this articles has been

translated into many other languages and is among the most widely read exposé of multi-levelmarketing deception.

"We’re Looking For Five Exceptional Leaders "

Aboard a plane heading for Kansas City, the attractive young woman sitting next to me turned tothe person behind and asked, "I noticed you reading the classifieds earlier Are you looking forwork?"

"Yes, I am," said the occupant, a woman in her early twenties who seemed surprised but pleasedthat someone had taken an interest in her "Actually, I’ve been looking for a job for quite some time.Why do you ask?"

"Well, I’m sort of in human resources for my company and we’re looking for people right now."

"Really? What kind of a company is it?"

"Well, we represent over 200 environmentally friendly products."

"Really? That’s terrific I really believe in products that protect the environment."

"We’re growing really fast now and expanding."

"That’s great!"

"Would you like to talk about it when we get to Kansas City?"

"Well, sure, but I’m looking for work in Maine That’s where I live."

"Actually, we have an office in Maine What’s your schedule like tonight or tomorrow?"

"I’m busy all day tomorrow."

"Okay, let’s get together this evening It’ll be fun."

"Great."

"Believe me, this is the opportunity of a lifetime I can’t wait to tell you all about it."

An elderly woman next to the job seeker commented, "It sounds like you’ve hit the lottery."

"Yeah, what luck!"

Yes, you might think so Yet, without asking, I instinctively knew that this ‘human resources’recruiter was not a human resources professional at all She was not authorized to offer a ‘job’ of anykind to anyone In fact, she did not even have a job herself

She was an independent distributor plying her wares and looking for sub-distributors Far fromoffering a job, she was seeking a financial investment from the young woman behind her She was one

of the modern day equivalents of the itinerant agent who sold stock certificates in promising – or

more often bogus – companies to the naive, the gullible and the greedy on the Herman Melville, MarkTwain-style Mississippi steamboats.

This enthusiastic and helpful traveler was yet another recruiter of a multi-level or networkmarketing company (MLM) in which – through a pyramid-like commission structure – eachdistributor has the opportunity to gain override payments on sales of as many as six levels of salesreps below Success in this business involves a ceaseless and boundless search for downliners on thecommission feeding chain below, a practice which leads to the necessity for these types of open andconstant business solicitations The fellow traveler who was the target of her initiatives was,surprisingly, one of few people who had never before encountered an MLM or pyramid scheme Herinnocent and unguarded questions showed that she was not alert to this type of proposition

This was to be her induction, her rite of passage into a whole new business genre We can onlyimagine her reaction to later finding out from the recruiter that the initial ‘job’ offer she was soexcited about would actually turn into a solicitation to invest The distributor, like her manycounterparts, would, undoubtedly, have wrapped such a clarification in a penetrating, highlyseductive presentation of her company and its superior product solicitation Such MLM pitchesfrequently include the tantalizingly presented potential for a $50,000 monthly income along withpromises of personal freedom and independence, effortless lifetime annuities and early retirement, allwithin easy reach especially for those who have vision, talent and a love for people And, it may wellhave worked on that un-informed, unemployed young woman from Maine as it has on countlessmillions of others The story goes on

On that occasion, I pretended not to hear I feigned sleep as we awaited take-off I avoided eyecontact though I felt my traveling companion’s hyperactive presence Ultimately, conversation wasunavoidable for I was proofreading this very manuscript My papers provided her with an openingforay After all, she was on a roll One appointment was already made She was undoubtedly thinkingthat this could be the day on which she would hit the jackpot with that one downliner who would setthe world on fire resulting in her accruing benefits for the balance of her born days

"Pyramid schemes and MLMs," I replied quietly when she inquired about the subject of mymanuscript

Thus began another close encounter with a true believer, an MLM proselyte Once again I facedthe challenge of speaking constructively about what I have studied, learned and concluded about thistype of business And, once again, I saw that information turned away because it disturbed the old get-rich-quick notion that has entrenched itself in the American mind

After getting the gist of my theme, this enthusiastic recruiter suddenly found herself struggling forcivility, all the while bristling with underlying defensiveness I had attacked the bastion of her faith,the seat of her dream, her very path to success And I was treading on America’s most treasured, evensacrosanct doctrine – the right of each American to unlimited personal opportunity and the chance tobecome wealthy ‘beyond [RM1]one’s wildest imaginings.’

So what if 99.9% fail at MLM, she countered Certainly it was because they had not really tried.People fail at all kinds of businesses In fact, most small businesses fail, she continued Failure inMLM is clearly and only the responsibility of people who don’t apply themselves

Oh, she knew about MLM fraud and misleading promotions and recruitment She volunteeredknowledge of the 1990 Fund America, Inc fiasco that swindled thousands of distributors across thecountry out of millions.1 She had even lost $3,000 in that mess herself She knew that the governmenthad closed down Fund America as an illegal pyramid scheme resulting in the arrest of the president

of the company – who later fled the country with millions in company funds – and the subsequentdiscovery that he was wanted for fraud in England

1Fund America, Inc of Irvine, California, was an MLM buying club that attracted over 100,000members nationwide, offering discounts on goods and services In 1990, Florida lawenforcement officials arrested president Robert T Edwards on suspicion of criminal fraud Hewas released on $1 million bail The company was prevented from operating in some states andlater declared bankruptcy It was, subsequently, discovered that Edwards had taken $5.5 million

in the form of salaries and bonuses and personally wired $11.3 million more to two mysteriousoverseas entities, one in Hong Kong, the other in the Netherlands

Our believer had also been an Amway rep She had paid for training and motivational tapes thatwere essentially about recruitment and manipulation, just another way to get money from theinexperienced and naive And she knew all about the disreputable recruitment tactics of so many otherMLMs But this one was different, she insisted After all, she was already a director – as if hercurrent success was certain proof of this company’s validity

She went on Yes, the founder of her company had been an executive in one of those misleadingMLMs but he had seen the abuses and he had corrected them in his new company Pointedly, I askedjust how many people were needed in an individual distributor’s downline to provide a sustainablemonthly income She said maybe a couple of hundred if all of them were consistent producers

Then I asked how many in her company presently had sustainable living incomes of $4,000 amonth Some were making over $50,000 a month, she replied tartly Avoiding this obvious diversion,

I pressed for the number of only those with middle class incomes of $4,000 a monthly

Thousands, she said.

I noted that this would already indicate a collective downline of over a half million people in theU.S in her company alone Was that possible?

She pondered the figures briefly and, without the slightest loss of composure, said that she did

not know the real number nor did she care to know There was always opportunity and MLMs had

barely begun to scratch the potential of the U.S market Anyone could make it if they just workedhard

Now I couldn’t resist going a little farther Even at the risk of sounding like a small townMethodist cleric warning against the evils of money and city life, I mentioned the commercialization

of personal relationships, the manipulation of friendships and the blatant misuse of family trust each

of which so characterize the MLM industry

"Everything is commercial," she snapped, as if I had been asleep for the last 100 years "We areall always selling That’s life today," she huffed

"As for traditional jobs, vocations and professions, well, corporations only use people,"shesaid She herself had once worked for a company and calculated that it had only paid her 1% of whatshe had actually made for them "Those kinds of companies just suck your blood and then fire youwhen you hit 50," she declared.

Thus having regained the adrenaline rush she had experienced after securing a appointment withthe job hopeful behind us, she told me that I was simply resisting the wave of the future Really Justlook at MCI, the long distance phone carrier, which is going MLM It’s everywhere, she said Shewas telling me?!

But, on she went In MLM, you can make a fortune with virtually no up-front investment Right.It’s providing opportunity to millions of people who are being thrown out of corporate America.Hmm It will, in fact, provide security when Social Security goes bankrupt And, it will go bankrupt,she finished triumphantly! Well, who could argue that point?

And, as for regulation, well, the government should just stay out of MLM, she said It was reallythe government that destroyed Fund America, Inc and caused her to lose $3,000 If do-goodgovernment regulators had not gotten into it, Fund America would still be going and she wouldprobably be good and rich by now They had caused thousands to lose their money when theyintervened, she railed as she gained momentum She would rather see people take their own chancesthan lose their money for sure when the government closes down a company

Somewhat caught up now, I noted that the government finds itself forced to intervene becausepyramid schemes are structured to inevitably fail They take money from those at the bottom and feed

it to those at the top I pointed out that the initial success of such businesses is an illusion Thateventually the base grows too large and is not sustainable And that’s why they are illegal That’swhat the fraud is all about

At this point, my passion began to dwindle as I was regretting my part in this discussion As soon

as the word fraud had slipped from my mouth, I realized that any further attempt at communication hadcollapsed if, indeed, it had ever had a chance

Further, it was clear that our now totally defensive distributor had cast me in the role of arepresentative of that Fifth Column of negativity, government control, skepticism, cynicism andcollectivism that she, in short, described as completely un-American Thus, as the plane began itsdescent into Kansas City, she delivered her coup de grâce

"I can live with risk, even failure," she said haughtily "But, what I can’t stand are dream busters,cynics who want nothing more than to kill other people’s dreams." Her company, she said, offered thechance for the American dream to come true I, on the other hand, simply offered nothing positive.Her last words

The plane mercifully landed as I wondered if the young woman behind us had heard any of ourdiscussion and if the appointment would be kept Alas, the bogus human resources professional andthe accused dream buster didn’t bother to exchange business cards We didn’t even say good-bye

Aftermath

Along with countless others that are taking place as this story is being read, this encounterdemonstrates that the ubiquitous proponents of MLM are not easily evaded, ignored or rebutted Thisnew form of selling relies not on product or cash to build its portfolio but on human resources.Growth of the MLM must proceed not incrementally or one by one in the traditional business modelbut rather exponentially One hundred are required to support one and ten thousand more to supportthe one hundred Solicitations must always expand and accelerate Momentum is the engine.Therefore, even flying high in the stratosphere, recruits must be found It’s the only way the MLMstory can go on.

With mesmerizing promises of extraordinary and easily attainable wealth, assurances of personalfreedom and happiness, MLM and pyramids are touted as answers to fearsome warnings of economicinsecurity or even global chaos Regularly offered are the irrefutable reminders that the only toolsneeded to build a successful downline, sales or participation team are as near as all of one’s friendsand relatives Certainly, to avoid the fate of running afoul of an MLM or an illegal pyramid inAmerica today seems nearly impossible.2

2So frequent and pervasive has the push for enrollments into illegal pyramid schemes become in

American society that network television sitcom, The Single Guy, made it comic material for an

episode in February, 1996 The concept required no explanation, the writers assuming correctlythat most viewers are personally familiar with the phenomenon The denial of the scheme’sillegality and the deluded hopes of easy and quick money were made the stuff of laughter even asone of the regular characters was arrested and led off to jail at the show’s end

While the paid media may bombard our subconscious, their seductions and influences areoffered via print and electronics which we are free to avoid or turn off MLM and illegal pyramidsuse no advertising nor have they any need for it They simply walk in the front door in the guise of afriend, lover or brother-in-law To withstand such individualized and intense enrollment effortsrequires a strong sense of personal security

At the very least, a savvy insight into the actual odds of success and a set of definitive questionsare needed in order to make a free and intelligent choice Faced with solicitations from friends orrelatives, a level of fortitude and social skills is required that would test the limits of any personalrelationships, especially those which are traditionally safe havens from commercial trade In thiscontext, it is no wonder that MLM evokes such powerful responses from blind allegiance to bittercontempt

Burning with zeal, millions have joined the movement A nearly equal number fail early andabandon the program Their ranks, however, are quickly replenished by new draftees For reasonsthat will be closely examined later in this book, almost no one who has been through the process canprovide a coherent explanation of the experience other than to offer a painful admission of their ownapparent insufficiency

With vast numbers of people failing at enterprises convincingly portrayed as easily-masteredwhile offering enormous financial potential, it should not be surprising that a psychic pall ofdisillusionment and disappointment has fallen over millions of past participants Far from a programthat is unleashing human potential and fulfilling dreams as the aforementioned traveling companion

claimed, if we look, we will see a voracious organism that churns and manipulates believers of theAmerican Dream It leaves in its wake a trail of cynicism and disempowerment, no small wonder asrecruits observe billions of dollars landing in the laps of tiny, elite groups at the top.

Our proselytizing travel companion prompted the recurring questions about the true incomepotential from MLM enterprises, the limits of their mathematical expansion and the legalities of anddifferences between MLM and pyramids Where does the truth lie in these all too frequent andunavoidable solicitations? Certainly not in misleading sales openers like the one offered by our ersatzhuman resource recruiter Definitely not in her exaggerated numbers about income potential or thesuccess levels of MLMers And, not in her revisionist history of the Fund America fraud Yet, neitherwas there validity in the countering call for government regulation or the high-minded detachmentfrom MLM’s promise of wealth and happiness

Eventually, clarification came with the realization that the mundane matters of pyramidstructures, the promotional rhetoric and success levels of participants are insignificant sidelines to themain issue MLM and the associated phenomenon of pyramid schemes are worth investigation andunderstanding because of the powerful spiritual and social messages they are espousing and for whattheir growth and expansion in America reveal about our lives

What we need to focus on is the fact that the increasing influence of multi-level marketing is notbased upon what is actually delivered to people in income or on the products that are sold in themarketplace Indeed, the appalling failure rate of participants in MLM and the illogic and illegality ofpyramid schemes would cause any reasonable person to wonder why anyone would enroll in suchimprobable ventures

Be it pyramid scheme or MLM, the question is why are so many Americans drawn to theseenterprises? In answer, greed, deception, economic insecurity, loss of community and pervasivecommercialism in our culture all play their parts These are the conventional explanations cited innewspaper reports when the illegal pyramid is prosecuted by local police or the investigativejournalist documents once again that virtually no one makes a sustainable income in the MLM system

However, a closer investigation reveals a more powerful force that is leading millions into thefraud and folly With anecdote, testimony, research and logic, we will trace the motives for this massphenomenon to a source that cannot be easily or glibly dismissed The clear but, perhaps,discomforting answer to this question is that Amway, Nu Skin, NSA, Herbalife and the hundreds ofother merchants of network marketing have converted so many of us into their itinerant sales repsbecause they appeal to treasured tenets of our faith

Aimed right at the spiritual, community-minded nature of man, these companies are tapping intosome of our most deeply held but least understood beliefs – beliefs that are so basic to American lifethat anyone who questions them is scorned as a heretic or as unpatriotic

False Profits is a true story about some who lost faith in the prophets, profits and promises of

pyramid schemes and multi-level marketing but gained profound knowledge of themselves It is thehonest recounting of extraordinary highs and antithetical lows – the excitement, the anticipation ofsuccess, the pain, the humiliation, the confusion, the self-challenge – that resulted from questing forfinancial and spiritual deliverance in the world of pyramid schemes and MLM

In this retelling, there is a good deal of information about what some call today’s most promisingindustry – MLM – and substantial evidence that can lead to the understanding of the term ‘falseprofits’ as it is applied to this industry It will also become apparent that, in order to understand thebeguiling appeal, the offered values and the allegedly spiritual messages of the MLM industry andpyramid schemes, we must look inward After all, no one was ever forced to join an MLMorganization or to enroll in a pyramid scheme.

Far from an exposé of an alien or negative force in our midst, False Profits offers an

introspective examination of our own needs and beliefs In the plot of this story, fraud and faith, mythand mysticism are seen to be closely linked as the specter of failure looks on

The objective herein is not to save anyone from failing It is, rather, to offer full disclosure aboutthis system, the type of which would be given to any prospective investor as a precursor toparticipation in a franchise or security The aim is to encourage people to look beyond governmentregulation of MLM in order to understand this industry’s economic realities

Neither a dream buster, False Profits invites you to determine, examine or reaffirm your highest

ideals for a life that is worth living as it points out the profound distinctions between an existencefounded upon material success as portrayed in the MLM solicitation and one that is dedicated tocommunal and spiritual vision As part of this rocky but worthwhile and upward climb towardsgreater spirituality, we herein have the opportunity to share the renewed possibility of finding ourauthentic selves through a deeper, more satisfying and untainted spirituality

Finally, False Profits serves to underscore the truth about our dreams, that they are woven out of

our unique and infinitely complex gene structures and definitive personal experiences In the writing,

we have come to the sure knowledge that dreams are not about having but about living And, mostimportantly, that dreams which are mass marketed – rather than privately nurtured in the soul – soonevaporate True dreams are lived and expressed every day because they are the materializations ofspiritual expression, the representations of our very beings As it has served the authors so well in thewriting, we offer the following content in the hope that it will provide the same useful purpose forothers in the reading

Section I

The Era of MLM

The New American Dream?

America, the home of the free and the brave, the land of opportunity, the place where all one’sdreams can come true It is, historically, the country where the poor and the dispossessed of the worldhave come to build a secure and promising future for themselves and their children Over the years,the fulfillment of America’s promise required commitment, persistence and sheer hard work But therewards for millions were real History was our guarantor

Today, America might seem a country where the old work ethics, standards and ideals have beenreplaced by a new paradigm The current message seems to be that if you work smart, not hard, youcan quickly and almost effortlessly become phenomenally wealthy All you have to do is enroll in thelatest multi-level marketing company or manipulate yourself into the right position in the newestpyramid scheme

Prosperity comes not from your own labor but from the work of those below you on adistribution chain which feeds override commissions upward Success requires not persistence butduplication Hard work and long hours are obsolete The only condition to making this system work isthat you believe the doctrine and then convince others to believe in it, too Attitude, faith, a demeanor

of confidence and a conviction that extraordinary wealth is your destiny – these seem to be the keys tosuccess and happiness in the 90’s

Where, you might ask, did this profound and fundamental shift begin to take place? When didpursuit of the American Dream slip from effort to enrollment, thereby tearing down the traditionalwall separating the commercial from the communal? When and why did friends and family becomeprospects? In answer, we shall examine this process in its most flamboyant manifestations – multi-level marketing and associated illegal pyramid schemes

In recent years, multi-level marketing – or MLM as it is known – has crept into the very heart ofthe business community, touching the lives of virtually all American consumers in one manner oranother The total MLM industry is now estimated to include between five and ten million distributors

in America who sell some $10- to $20-billion of goods, mostly to each other The larger of theseoperations have already reached their saturation points in the U.S.A and are now concentrating onAsia and Latin America In fact, this industry which was once concentrated in the aspiring lower andmiddle classes is now also penetrating the ranks of medical doctors, chiropractors, dentists and otherhigh income professions

Who has not been solicited? Who has not tried it? Who can even keep count of the times theyhave heard the utterance of telltale words – ‘incredible opportunity,’ ‘momentum,’ ‘unlimited,’

‘wealth beyond your imagination’ – from family, friends and strangers alike all of whom show asudden and inordinate interest in our very well-being as it relates to their new downline Everyonehas become a prospect

The great majority of new distributors drop out of the system within a year only to be replaced

by a new set of hopefuls, making the total number of Americans touched by MLM almost universal

That being the case and since MLM must insinuate itself into the fabric of family and community inorder to grow, its influence on social and private life is immense Yet, to date, it has remainedessentially unexamined.

MLMs and pyramids are structurally the same, both relying upon an ever expanding chain ofenrollment The crucial and only difference is that pyramids amass their funds from enrollment feeswhile the MLM, to be legal, must engage in retail sales of some type of product or service In apyramid, the top levels are fueled only by recruitment of an ever-expanding base of hopefuls There is

no sustainable enterprise occurring other than paid enrollments Mathematically, the very structure ofMLMs or illegal pyramids disallows them from expanding indefinitely If growth continues according

to plan, later recruits will inevitably lose their financial investments Those who launch pyramidsknow the ruinous course these programs will follow yet effectively dupe others into enrolling.Therefore, early entrants win at the calculated loss of the later enrollees

Even though the largest of all MLMs, Amway, has reached a pinnacle in the American freeenterprise system and despite the MLM recruitment rallies that offer the fulfillment of patrioticnotions such as personal freedom and individual achievement, we will see that MLM is a falsestandard bearer of the American economic system

Antithetical to the American spirit, the value system implicit in MLM measures achievement only

in dollars It belittles pursuits which do not amass great personal wealth It limits our workopportunity, demeans our individuality and distorts the pursuit of happiness In the end, acceptance ofMLM’s core values, even briefly or unconsciously, can account for the sense of humiliation andbewilderment experienced by so many who have churned through such programs

The vast majority of America’s opportunities do not promise and will never produce month incomes Rather, their value will be accounted for in as many other ways as there are people.For America’s uniqueness is not in the number of its millionaires but in the extraordinary freedomoffered to each of us to develop and express our individuality and cultivate our special talents andinterests These opportunities include unlimited options spanning art, entertainment, industry,academia, the professions, public service and virtually every entrepreneurial endeavor imaginable.America is truly a nation where the metaphysical maxim – if it can be imagined, it can be manifested– is demonstrated daily And, it is faith in this type of opportunity that must be protected

$50,000-a-Since the beginning of this investigation into multi-level marketing and illegal pyramids, themini-dramas of artful and deceptive enrollment practices in the MLM industry and raw examples oftheir damage to family and personal life have surfaced Old friends send chain letter solicitations.Family members and neighbors become obsessive, addicted enrollees in Amway or NSA, another ofthe most prominent MLMs Others confide strange encounters with what they describe as a cultishunderworld trying to convert them to a new economy which promises extraordinary and easily-gainedwealth

Some former MLMers must actually seek outside help in breaking what they describe as apersonal addiction to the promises of MLM Others send out heart-rending requests for counsel forloved ones or close associates who appear to be lost in the MLM subculture, those who have become

so deluded with dreams of becoming instant millionaires that they forsake or reject all contacts unlessenrollment and sales might result Clearly, far from becoming the new American Dream, MLM has in

many instances become a national and recurring nightmare.

Spiritual Seekers - MLM’s Chosen Ones

Multi-level marketing and illegal pyramid schemes are recent mass phenomena involvingmillions of people who come to these enterprises with a multitude of motivations, backgrounds andbeliefs Curiously – or not so curiously, as we shall see – a concentration of interest in MLM andillegal pyramids has been generated in the spiritual community and from that significant societalsegment which has been loosely referred to as New Age Here is where our primary inquiry shall befocused

New Age is among the newest of all forms of community representing millions of people whoare joined globally, not by blood, flag, geography, history or founding father but by values and beliefsalone The term i.New Age may seem indefinable; or even presumptuous but there is a philosophical,sociological and psychological identity attached to it that undeniably unifies and energizes millions ofpeople In evidence, there are emerging psychographic3 studies which are beginning to put cleardefinition to this population subset

3Psychographics is the study of markets based on people’s attitudes and lifestyles which areincreasingly being recognized as more influential on behavior, especially buying behavior, thantraditional identifies of age and education, for example

Currently, there are other interesting indicators of shared preferences among those who would beidentified as New Age thinkers, for example:

Women in Los Angeles with household incomes of over $40,000 are more likely to have been to

a channeler than to a psychiatrist, counselor or psychotherapist

67% of Americans report having experienced E.S.P

25% of Americans believe in reincarnation

More than $300 million worth of audio and video tapes demonstrating ways to harness mindpower are sold annually

Shirley MacLaine’s Inner Workout meditation video sold 100,000 copies in its first four months.Natural food is the fastest growing segment of the $300 billion retail food industry.4

4Gathered by television producer, Diane Collins of Miami Beach, Florida, in a proposal for a

television series on the New Age Credits respectively: L.A Times; University of Chicago; US News and World Report; Forbes; Forbes; US News & World Report.

Even with these types of shared characteristics, this community seems to defy strict definition.However, one central and defining tenet of this community – belief in the power of thought to changeand create reality – is not ridiculed In fact, the validity of this psychological or metaphysical concept

is being accepted and incorporated into modern medical practice, sales training, professional sports,

career planning, even into popular entertainment.

A long, illustrative list of examples could be assembled of recent movies and books that utilizethe theme of metaphysical powers of thought and belief The Karate Kid and its sequels, for instance,show a Zen master teaching an American youth the authority of and belief in creative visualizationwhich results in the student’s newfound ability to master karate and defeat competitors who havetrained for many more years in the art Indeed, the metaphysical miracles portrayed on the screen or inwriting are coming to be seen as literally true and within the realm of experience of averageAmericans

In his bestseller, Megatrends 2000, published at the beginning of the 90’s decade, John Naisbitt

estimated that there were approximately 20 million New Agers in the U.S., roughly 10% of the entirepopulation of America In some sections of the country such as in East and West Coast cities, Naisbittestimated that the percentage may be as high as 12-15% He wrote of these New Age people that theyare "the most affluent, well-educated, successful segment of the baby boom." He quoted arepresentative of SRI’s Values and Lifestyles Program who asserted that the influence of New Agers

on the culture extends well beyond their number and further stated that " they tend to set the trends."The proposition that the growth of pyramid schemes and their legal MLM counterparts is driven

by their unique appeal to a special strain of American faith which links and often equates riches withredemption is vividly documented in the dramatic events and commentary that follow By looking atthe MLM and pyramid scheme phenomena through the spectrum of New Age values and beliefs, weshall see in sharper resolution the propelling connections between belief and behavior

The Religion of Abundance

History shows that the New Age movement and its 19th century predecessor, New Thought, haveplayed unique roles in the sociological and philosophical development of modern America.Consequently, the New Age community is now the bearer of enormously powerful ideas which somehistorians believe have not only preserved the American belief in unlimited opportunity for everyindividual but now help to shape American business thinking

Building on both the Puritan faith and the Protestant work ethic which linked virtue with labor,this emerging philosophy expanded to incorporate the Transcendentalism of Emerson and Thoreau,both champions of individuality and self-reliance who asserted an inspiring metaphysical connectionbetween spirit and matter This maturing belief system became codified, organized and widelydisseminated in the New Thought religious congregations such as Christian Science, Unity andScience of Mind More recently, it has connected with self-help and human potential courses byinsinuating a direct relationship between financial abundance and spiritual enlightenment

The first reference to success as the gaining of wealth appeared in an American dictionary only

as recently as 1891 Prior to this date, success meant many other things Two hundred years beforesuccess had been redefined in the popular mind as the gaining of wealth, the achievement that mostAmericans strived for was always in the context of a larger framework of values Indeed, Puritantheology required that financial success be deeply connected to the common good Seeking wealthwas a public not private duty which was linked to virtue and its rewards were to be experienced aspart of the broader good of the world not simply in the private accumulation of money As sociologistChristopher Lasch put it, the 19th century preached compulsive enterprise But industry, thrift andtemperance were promoted not merely as stepping stones to success but rather as their own rewards.Even the most unabashed exponents of self-enrichment clung to the notion that wealth derived valuefrom its contribution to the general good and to the happiness of future generations.5

5Christopher Lasch, The Culture of Narcissism: American Life in an Age of Diminishing Expectations New York: W W Norton & Co., 1978, page 57.

As the importance of these traditional values declined, wealth by itself became the sign of God’sblessing upon the righteous Lack of wealth was the sign of alienation from the Universal First Cause.Historian Richard Weiss noted the seamless connection between New Thought’s tenets of faith andearlier orthodox Protestantism in which the power to believe and then manifest reality from beliefwas a modern form of placing your trust in God or having faith in the Divine The subconscious,Weiss and others observed, later became the link to the Divine replacing prayer or even theintervention of saints Thus, by conditioning the subconscious, one could connect directly to theUniversal Being

In the new creed, wealth manifests by simply thinking continuously and affirmatively about it.Such affirmations are the means by which one can spiritually align with the higher order Theadvanced thought is that lack of wealth is not prescribed or intended for anyone but is only the result

of one’s failing to align with the Universal Will As such, each individual is personally and totallyresponsible for his or her own destiny and the means to attain prosperity are available to all in light

of intention, will and faith

The great contribution of New Age precursor, New Thought, was to replenish America’s faith inopportunity and personal entrepreneurship in response to seeming and increasing personalpowerlessness in the face of huge financial organizations New Thought asserted – and New Agecurrently attempts to prove – that the power to rise in the world financially depends not on currenteconomic conditions but only on one’s personal mental attitude Therefore, not only are frugality andhard work unnecessary, they are irrelevant to the outcome Wealth can be achieved painlessly andinevitably by simply aligning with Universal Intelligence which wills us all to be healthy andprosperous

The American tradition of Puritanism that had undergirded free enterprise and the wealth-seekingway of life was, thus, superseded by a new religion which took up this very same banner of seeingfinancial achievement as a sign of God’s beneficence Even as science and plundering corporationseroded the values governing the quest for wealth, New Thought – then New Age – restored America’sfaith in the individual and offered its own sets of rationalizations and credos

The full embrace of the metaphysics of prosperity consciousness by the mainstream culture can

be reliably dated to the mid-1980’s during a time when taxes were reduced and the debt ceiling wasall but eliminated In words and demeanor, then-President Reagan represented boundless optimismand faith in America’s destiny of global economic dominance and moral leadership Communism andall its lesser varieties of collectivist and social engineering policies were literally being called evil.Greed became good as the stock market rose Prometheus-like The anxieties and cynicism of the post-Vietnam and post-Watergate eras were being shed Supply-side economics was in vogue and trickle-down prosperity for the masses was confidently predicted

High interest rates, inflation, the skyrocketing federal deficit, rising personal debt, credit cardabuse, the decline of American manufacturing, the dangers of staking so much on the abstractions offinancial futures, the growing disparity between the haves and the have-nots and other such domesticindicators all receded in importance The larger picture representing economic growth and expansionheld our attention Faith and confidence were deemed the only essential factors to a future of success

Prosperity consciousness was being fully embraced by Dale Carnegie and a host of otherbusiness boosters, sales trainers, motivators and speakers who applied the philosophy to businessand taught it as a new technique for personal advancement and competitive advantage The originaland transforming philosophy of the New Age movement was, thus, becoming indistinguishable fromthe values and promises of the acquisitive consumer society True to its self-definition as societalexplorer and harbinger, the New Age movement anticipated and set the trend, then helped leadAmerica into a new way of thinking about labor and wealth and their relationship to spirituality

It seems from the history of the New Age movement that one precept – called prosperityconsciousness – has been singled out and is enjoying extraordinary power in America today.Historically, its roots are traceable to the Puritan work ethic but, over the last century and a half, theconcept of prosperity consciousness has undergone a major transformation Prosperity, originally atranscendent state of being, has become defined as simply financial wealth and has been stripped of

any of traditional Puritan values of community responsibility or personal standards of behavior Allthe cosmological and spiritual authority it originally carried has been transferred directly to thebusiness of accumulating wealth Therefore, over time, success has come to mean only one thing –financial achievement.

Without balancing spiritual and social values, these ideas can feed the insatiable Americanappetite for commercial growth and expansion as they justify personal avarice Indeed, they can serve

as triggers and motivators for rapacious and irresponsible activity The Airplane Game pyramid scamthat swept through the New Age community in the late 1980’s and which is dramatically recounted inupcoming pages is a quintessential example of how a good idea, lacking any countervailing valuesand taken to its logical conclusion, turns to madness

Prosperity in the Modern Day

The story picks up in the latter years of the decade just months before the stock market crash of

1987 Even as it shattered some paper futures, this event did not shake the national faith in WallStreet’s destiny to provide God-given and unending prosperity Nowhere was this faith in abundanceand prosperity held more intently than in the New Age community, stronghold of the chosen people inthe chosen land It was at this point that the merger of mainstream American thinking and New Agephilosophy would result in the acceptance of MLM into the traditional business world

After languishing on the fringe since the late 1950’s as largely shunned and discredited, themulti-level marketing movement catapulted into economic expansion in the late 1980’s This was notmere coincidence but, rather, inevitable given the potent beliefs of the New Age as they were adopted

by an economy dependent upon faith and optimism MLM was simply positioned to take its place inthe ranks of legitimate business as an industry whose driving force and true products are hopes andpromises, leaving faith and finance clearly indivisible

At this point, it is worth noting that while the New Age is the primary focus of this work, it is not

to suggest that people who identify with the ideas and values of New Age are the main constituents orproponents of MLM or pyramid schemes To the contrary, MLM and many of the blatantly illegalpyramids adapt, chameleon-like, to numerous segments of the larger community Yet in all thesevarious formats, MLM and all pyramid schemes rely upon the core belief which is so elementallyrevealed in the New Age community In this modern American Dream, wealth comes not fromfrugality, hard work or ingenuity but from being at the right place at the right time And, faith will takeyou to this mythic and magical place

No surprise then that there are countless examples of MLM creeping into the most sacred ofplaces Witness evangelist Pat Robertson who started his own MLM company and enrolled thousands

of his congregation by proclaiming it a form of "prosperity theology." Or motivator and evangelistRobert Schuller who sells his tape program through MLM organizations and calls it PositiveThinking In 1988, thousands of middle class African-Americans were caught up in a swindle whichplayed upon America’s faith in an ever-expanding economy Dubbed the Corporate Ladder, BlackEnterprise Magazine wrote that it was "the rage in black communities from Brooklyn to southwestLos Angeles." So it is that we can see pyramid schemes and MLMs flourishing among such diversefactions as Fundamentalist Christian churches and specifically targeted professions such asphysicians, dentists and chiropractors

According to today’s most popular MLM promotional book, Wave 3: The New Era in Network Marketing by Richard Poe, the 1980’s actually marked the second wave of development for MLM

with an explosion in the number of companies and distributors Still showing robust growth andprofitability in the 1990’s, MLM has continued its expansion with some companies selling shares onthe major stock exchanges although many business journalists and analysts remain leary of theirlonger term investment worth Oddly, a major contributor to this extraordinary growth was the federalcourt decision which declared the Amway Corporation, the largest of all MLMs, a legal businessafter the Federal Trade Commission lost its case of trying to prove that Amway was founded on apyramid scheme

As we will soon see, it was the social philosophy of New Age in its most recent metamorphosisthat served as the bold rationale for the Airplane Game scheme, the Fund America fraud and othersuch follies Similarly in the legalized multi-level marketing industry, this philosophy plays a centraland defining role for enrolling and inspiring distributors Faith in a destiny of prosperity isproclaimed as the main requirement for quick and certain wealth Thus we can easily see that thestudy of the MLM and pyramid scheme phenomena through the experience of the New Age community

is, prophetically, a study of mainstream America

The MLM Catechism

Wherever there is a faith there must be a catechism which is to be studied, recited and taught byits followers The MLM industry which is in the business of selling faith makes far greater use of thecatechism of the New Age than any other business sector in the American economy Through books,audio tapes, videos, recruitment rallies and millions of personal training sessions, this new Americanbusiness philosophy – promising wealth to those with vision and belief – is aggressively propagated.Similarly, as the economics of pyramids require unceasing expansion at exponential rates, itscatechism must be spread at an even more intense pace In other words, many more will be calledthan will follow

Unlike those of traditional sales training or conventional business and finance, MLM’s lessonsare infused with a sense of the divine The principles that undergird its foundation are advanced notjust as laws of economics but as the laws of the Universe which can be plainly seen in one genre title,God Wants You to Be Rich.6 Found in this book’s chapters are not just mundane economic principles,rather, we encounter the "theology of economics." Libraries file this book and others of its ilk in twosections, Economics and Economics-Religious As it is no less than a manifesto of a financialreligion, it would seem appropriate to view this as another catechism rather than as a book on simplebusiness boosterism

6Paul Zane Pilzer, God Wants You to Be Rich: The Theology of Economics New York: Simon

& Schuster, 1995

In these more modern faiths, the assertion is that God explicitly desires personal wealth for thefaithful Poverty is no mere misfortune and certainly not a virtue for which one is blessed In fact,poverty is viewed as no less than a sin The thinking follows that the means to attain this abundantstate of grace and achieve its attendant wealth involve spiritual and psychological choice

The way in which America came into possession of this new type of faith can be more clearlyunderstood through a study of the Christian Science, Mind Cure and faith healing movements andsimilar veins of thought which linked spirit and matter In fact, it was the quest for spiritual healing ofthe body that led to what is known today as prosperity consciousness or, as some Christianevangelists refer to it, prosperity theology

During the 19th century, metaphysics – a belief in a higher reality which governs and explainsphysical behavior – had enabled Christians to maintain their divine connectedness with God despitethe findings of science which linked man to lower animals Through affirmations, religiousceremonies and prayer, Christian Science and its offshoot groups ‘proved’ the existence of a higherplane, a natural philosophy that governed physical science.7 Consequently, faith healings were calledscientific demonstrations of a higher metaphysical reality

7Mark Twain believed that Christian Science would eventually sweep the entire country and

become the prevailing religion, such was its power and momentum in later years of the 19thcentury From extensive personal investigation, Twain concluded that Christian Scienceunquestionably delivered on its promise of healing through metaphysical treatments Did it alsoresult in the needless deaths of some members due to lack of conventional medical care? Yes,Twain decided, but it probably killed no more people than did traditional medicine Mark

Twain, Christian Science New York: Harper & Brothers, 1902.

While Christian Scientists viewed the use of these principles to gain money as a distortion and amanipulation, others logically deduced that metaphysical applications should be able to producefinancial as well as physical health The power resided in alignment with the Universal Will Thispower, at least potentially, was available to everyone and in all endeavors of life Eventually, itbecame creed that if God wanted us to be physically healthy, surely He also desired our financialhealth

Any investigation into the history of the New Age will quickly reveal what may seem, at first, anodd connection between health and wealth Yet, these two seemingly distant fields of medicine andeconomics are now philosophically bound together Today’s New Age bookstores are replete withtherapies, diets and lifestyle regimens focused on achieving a longer and healthier life Found in thesame section are the metaphysical remedies for overcoming poverty and achieving wealth andleisure

Some historians date the shift from New Thought’s obsession with spiritual healing to using its

technique for gaining wealth with the publication in 1897 of Ralph Waldo Trine’s In Tune With the Infinite8 which became one of the greatest non-fiction bestsellers of the 20th century From this pointforward, the spiritual concepts associated with New Thought have been as concerned with conjuring

up wealth as with sustaining health

8Though this book has been cited as a turning point in the direction and focus of New Thought, areading of the book shows the reticence of New Thought teachers to convert their philosophyinto a technology for making money This task awaited business writers several generationslater Trine did state that "the old idea of godliness as poverty has absolutely no basis for itsexistence, and the sooner we get away from it the better.…Faith, absolute dogmatic faith is theonly law of true success." However, in his chapter entitled, "Plenty of All Things – The Law ofProsperity," he also stated, "He who is enslaved with the sole desire for material possessionshere will continue to be enslaved even after he can no longer retain his body… The one who hascome into the realization of the higher life no longer has a desire for the accumulation ofenormous wealth… Many a person is living in a palace today who in the real life is poorer thanmany a one who has not even a roof to cover him." Trine referred to the obsessive materialism

as a "loathsome disease of the body" and a "species of insanity."

The most recent illustration of the philosophical connections between health and wealth can befound in the recently popularized career of Deepak Chopra His early metaphysical books were

focused on creating good health, e.g Perfect Health, Quantum Healing, Creating Health and his blockbuster, Ageless Body, Timeless Mind However, Chopra then followed the now well-traveled

path leading from creating health to creating wealth as can be seen in his subsequent offerings,

Creating Affluence and The Seven Spiritual Laws of Success.9

9Note another interesting overview of this metaphysical magician in "Deepak Chopra Has a

Cold" by Chip Brown, Esquire magazine, October 1995, pp 118-125.

While formerly rooted in Puritan theology and Calvinism, success in America has been largelyviewed as cosmological This shift began to take place in the post-Protestant era when the laws ofmetaphysics began to replace the traditional Protestant work ethic as the philosophical supportstructure for entrepreneurship In fact, New Thought or mind power disdained the Protestant values offrugality, economy and community obligation, instead proclaiming the new painless values of ease,relaxation and comfort Thus, a way of thinking replaced a way of acting

As historian Richard Weiss noted, "Using Emerson’s Transcendentalism, mind power referred toGod as the Universal Intelligence Man is part of this divinity and, therefore, can think his way tosuccess by aligning with cosmic force Mind is equated with soul A healthy mind is a healthy soul.Virtue is identified with health rather than frugality, prudence and industry Sickness is sin andsickness is incompatible with success just as laziness was in an earlier era This new approachstressed not virtue but psychological techniques of self-manipulation as a means to achievement.Mind power gave the individual his freedom He only had to align with universal laws and all thingswere possible."10

10Richard Weiss, The American Myth of Success from Horatio Alger to Norman Vincent Peale New York: Basic Books, 1969, p 14.

It is this new American faith in prosperity shorn of any social consequences or qualifyingpersonal values that fuels the MLM movement It enables the movement to enroll thousands of newrecruits in the face of 99% economic casualty rates It also provides the modern rationalization anddream-like appeal which encourages honest, tax-paying Americans to join illegal pyramid schemes

The publishing of these ideas and beliefs has today grown into a vast industry that is sointertwined with the MLM movement that it is difficult to separate the two MLM uses the catechism

to argue the historical inevitability of its selling methods and the cosmic truth of its cause New Agepublishers use MLM to market their books and tapes MLM teaches the health/wealth catechism to itsdistributors and then sells them the New Age remedies, herbs, vitamins, weight-loss formulas,subliminal tapes and other inspirational media to re-train the subconscious

More powerful than any product, charismatic leader or compensation plan, the literature of faith

is the prime tool used to recruit and to persuade new distributors to join MLM sales organizations.Once enrolled in the system, the new distributors are urged to buy more of these materials on aweekly basis, making MLM distributors a prime market for these products

Consider the circularity of this process The MLM company provides the new recruit with themetaphysical literature of visualization, belief and the power to manifest a new reality of wealth andluxury Inspired by this hopeful and appealing message, the convert joins the MLM company which

presents itself as the necessary wealth-producing vehicle The transcendent plan for achieving thepromised wealth calls for selling the inspiring literature to more recruits As the message is spread inevangelistic fashion, the new recruit will reap the profits from on-going sales into infinity just as theliterature prophesied Believing it makes it happen.

This circular system has been most grandly and controversially employed by distributors of theAmway Corporation, the biggest of all MLMs For instance, Amway’s largest distributor, DexterYager of Charlotte, North Carolina, operates a $35 million-a-year business selling motivational andinspirational tapes to his downline distributors Dream big Be persistent and consistent Avoidnegative thinking, the tapes exhort the faithful Each week, tens of thousands of Yager distributors payfive dollars or more for the featured audiocassette The tape-of-the-week is shipped to 50 states and

10 foreign countries

Yager and his supporters say the tapes and books help people succeed by bolstering their faith,the key to making dreams come true "You’ve got to keep them dreaming," Yager advised in a fall,

1995 edition of Dream Builders, his network magazine "Take them dreaming so that they get

hungry for the things they’re not satisfied with, what they have won't do… We've got to keep themlooking at houses, boats, planes, cars, vans, expanding and stimulating and fertilizing that powerfulbrain that God gave every one of them until they believe they deserve more and they will go after itand they will get it."

In a 1995 three-part analysis of the Dexter Yager empire, the Charlotte Observer noted that someAmway dropouts say "the endless stream of motivation aids keeps marginal salespeople believing –

in the face of poor results – that success is just around the bend."

"The tapes and books kept me brainwashed," said one ex-distributor who was quoted in theseries after having spent 13 years in Yager’s Amway network "They get you in this frame of mindthat you need to feed on the materials in order to survive." He said the barrage of motivation aids puthim "in a performance trap" where he obsessed about achieving but felt mired in failure He had spent

$30,000 on tapes, books and rallies before dropping out of Amway and filing bankruptcy in 1992

A Pennsylvania lawsuit recently filed by former Amway distributors called the tape selling plan

"a pyramid-type scheme" which has "coerced" thousands of Amway recruits into purchasingmarginally useful materials The terse language of the suit reads, "At all times relevant hereto,defendants Britt and Yager (Bill Britt and Dexter Yager, the largest Amway distributors in the world)regularly represented to plaintiffs that their success as Amway distributors was contingent upon thepurchase of defendants Britt and Yager's motivational materials, and that without such materialsplaintiffs would be unable to build and maintain successful Amway distributorships."

The plaintiffs alleged that selling inspirational tapes to downline sales reps is a more profitablebusiness to Amway’s largest distributors than selling Amway products themselves Officially, theyare treated by Amway as sales tools But, in other MLM organizations, the inspirational materialcontaining their catechisms has, indeed, risen beyond the status of marketing material to that ofofficial product

One of America’s fastest growing MLMs, Nutrition for Life, which was founded by marketerKevin Trudeau sells the inspirational cassette tapes of the largest publisher of New Age catechismmaterials, Nightingale-Conant, as one of its core products In fact, a Nightingale-Conant Nutrition for

Life on-line promotional message to new distributors informs them, "Now you can target your innerself with valuable resource programs These self-improvement tools unlock the powers of the mind.You can commit to making a personal difference by equipping yourself to achieve your goals andattain the success you deserve."

What can result from using – and selling – these personal development cassettes that target theinner self? For this, the company turns to the inevitable pyramid mathematics of the multi-levelmarketing industry Each one has a slightly different twist on the math but, essentially, all lead to theexponential growth potential

"On the 7th level," the literature states, "the income potential for sponsoring just 8 (newdistributors) personally goes to 18% per month or $294,912 With the 4x7 Forced MatrixCompensation Plan with spillover and a massive nationwide advertising campaign by marketingexperts reaching millions with this opportunity, our success has great potential," the new recruit isinformed

In keeping with the New Age tradition of linking wealth-building with a healthy life, the otherproducts of Nutrition for Life are vitamins and herbs Identifying itself with the philosophicalprecepts of the New Age upon which all MLM enrollment campaigns are based, Nutrition for Lifeends its advertisement with its trademark New Age aphorism, "Success Is the Natural State of theUniverse."

Over the past fifty years, the metaphysical message that MLM relies upon so strongly – chiefly,that a person becomes what he thinks about – has permeated public thought in America Clearly, theidea that a person can reinvent his personality, position in society and personal happiness by simplywilling it has powerful democratic appeal

In the 1990’s, this idea has taken political form in the message that personal responsibilityshould be emphasized over social welfare concerns The primary concentration for delivery of thismessage is in the motivation industry where it is most fervently taught and utilized in the area ofbusiness sales with the MLM industry taking a striking lead in the use of this selling strategy

In a four part article entitled "Is There a Science of Success?" in the February, 1994 edition of

The Atlantic Monthly, writer Nicholas Lemann examined the assertions of prosperity thinking in light

of academic research and how it manifests itself in American life

Lemann observed that, for the most part, the predominant concepts of prosperity consciousnessare contained in an audio tape by Earl Nightingale called "The Strangest Secret." The publisher ofthis tape, Nightingale-Conant, claims it has outsold any other audio tape in history Lemann wonderedwhy the idea of employing motivational and affirmative techniques to reshape the subconscious isdominated by business boosters and professional promoters rather than by social scientists in theacademic fields of psychology or sociology

It would seem, he noted, that an idea of such power and potential for helping people would bemore seriously studied in universities Instead, as he demonstrated, it is almost totally promulgated byaudio tape publishers like Nightingale-Conant as a technology for making money The motivationindustry, as he termed it, is skewed toward fast-growing areas like Southern California, Florida andTexas and is aimed at salesmen and people who are ambitious but not comfortably settled into a role

Lemann traced the career of David C McClelland, a psychologist and former Harvard professorwho now teaches at Boston University In mainstream academia, Lemann said, Dr McClelland hasthe most substantial record to date of examining the relationship between motivation and economicsuccess Among his former students were Timothy Leary and Richard Alpert, now better known asBaba Ram Dass.

The Atlantic Monthly article concluded that, despite more than 40 years of work, neither

McClelland nor anyone else in the academic world has succeeded in establishing a strong orpredictable link between the techniques of prosperity thinking and actual economic advancement orpersonal happiness Nonetheless, there are barrages of claims that are put forth by sales trainers andself improvement course developers such as Life Spring and the Forum that would have followersbelieve otherwise More importantly, the article acknowledged that the values that are associatedwith this thinking – greed, ambition, manipulation and narrow-minded self-promotion – havedemeaned it as an area for serious inquiry

David Winter, a researcher who has worked closely with Dr McClelland and who hasdeveloped a technique for scoring political speeches and other texts for motivational content, wasasked by Lemann to listen to "The Strangest Secret." Winter acknowledged the practical usefulness ofsome of the techniques offered but went on to say, "This stuff is largely enmeshed in a set of values…(in which) all goals come down to money."

The theme of Lemann’s extensive article was to expose the potential importance of linking how

we think or, more importantly, how we can change the way we think, to improving the fortunes andsatisfactions of our lives If motivation to succeed really was both measurable and teachable, Lemannasserted, it would have profound effects upon society He concluded that the study of the subjectdeserved the respect and attention of academia, government and psychology At the present time,however, and in light of the value system in which it largely operates, as he put it, "about the onlyplace such discussion occurs is on infomercials."

A New Age-oriented reader of the Atlantic article might take exception to the placing of positive

mental attitude, Nightingale’s "Strangest Secret," motivational techniques, psychological testing andthe spiritual concept of prosperity consciousness all in the same category This same reader mightalso wonder how anyone could truly question whether reshaping our minds leads directly toreshaping our lives To the New Ager, this is a self-evident reality

But who can deny the conclusion that this fundamental belief has been usurped and dominated bythe larger belief system of seeking happiness through wealth and consumption? What we now callprosperity consciousness began as a transcendent and spiritual concept which specifically avoidedattaching purpose and objectives to prayer, relying instead upon trust in and alignment with a higherpower

Formulated and articulated originally by a small band of Transcendentalists who eschewed thecommercialization of life, it has evolved into its present form as a financially-driven body oftechniques Moving from its status as a spiritual philosophy, it now lives as secret technology forsuccess This secret is bought and sold daily and is put forth as the foundation and justification for themost outrageous, hopeless and often illegal schemes In fact, those who are today’s self-appointedspiritual standard bearers of the original message have largely become indistinguishable from the

business boosters and promoters of the motivation industry.

In the coming chapters we will look at what kinds of personal and communal realities aremanifested by a spiritual philosophy in which "all goals come down to money."

Section II

The Scene of a Crime